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Postmedia, Torstar swap 41 newspapers, most to close

Postmedia Network Inc. and Torstar Corp. announced a deal to swap dozens of free daily and community newspapers, most of which will be shut down due to declines in print advertising revenue.

Canada’s two largest newspaper chains announced Monday that Postmedia acquired 22 community newspapers and two free dailies from Torstar subsidiaries Metroland Media Group and Free Daily News Group in exchange for 15 community newspapers and two free dailies.

In the Kingston area, the only publications affected are small weeklies.

Torstar will close all but four of the properties effective immediately, including three paid dailies, the Barrie Examiner, Orillia Packet and Times and Northumberland Today. Forty-six employees will lose their jobs at community newspapers and receive severance packages. One job will be lost at 24 Hours in Vancouver. Torstar will continue to operate the St. Catharines Standard, Niagara Falls Review, Welland Tribune and Peterborough Examiner.

Postmedia is the owner of The Kingston Whig-Standard, The London Free Press, Chatham Daily News, Stratford Beacon Herald, St. Thomas Times-Journal, Sarnia Observer, Woodstock Sentinel-Review, Brantford Expositor and Simcoe Reformer, none of which is affected. But the company will close all but one of the newly purchased properties – it will continue to operate the Exeter Times-Advocate and the Exeter Weekender – by mid-January, with 244 employees losing their jobs.

“This transaction allows Postmedia to focus on strategic areas and core products, and allows us to continue with a suite of community-based products, in a deeply disrupted industry,” executive chairman and CEO Paul Godfrey said in a statement.

“What makes this particularly difficult is that it means we will say goodbye to many dedicated newspaper people,” Godfrey said. “However, the continuing costs of producing dozens of small community newspapers in these regions in the face of significantly declining advertising revenues means that most of these operations no longer have viable business models.”

Postmedia continues to employ 3,500 people across Canada. It said the transaction helps preserve jobs in areas that can no longer sustain multiple products.

Both companies said the deal will result in cost savings, with Torstar expecting to add $5 million to $7 million in annual operating profit. Torstar said the transaction was effectively non-cash as the properties exchanged were worth roughly the same amount. Postmedia said the transaction is not subject to merger notification provisions of the Competition Act and does not require regulatory clearance.

In a statement, Torstar’s Metroland Media said it reviewed the financial performance of the 13 cancelled publications before determining closure was the “only realistic option,” given falling advertising revenue.

The newspaper industry is undergoing massive disruption as print advertising revenue declines and readers consume their news online. Digital advertising revenue is growing, but the vast majority of growth has gone to Google and Facebook.

Internet advertising revenue jumped to an estimated $5.5 billion in 2016, with Google and Facebook attracting nearly three quarters (72 per cent) of the spending, according to the Canadian Media Concentration Research Project.

“The growing strength of digital giants has caused seismic shifts in the allocation of advertising revenues – putting all media companies under massive pressure,” Andrew MacLeod, Postmedia’s president and chief operating officer, said in a statement.

“Our digital strategies are showing promising signs but we must take all possible actions in order to give these new initiatives time to grow momentum while managing the decline of legacy revenue streams and their associated costs.”